On September 24th, the Government of Canada announced the development of a policy framework to support the trade of Internationally Transferred Mitigation Outcomes (ITMOs) as outlined in Article 6 of the Paris Agreement.
By establishing this framework, it will allow Canadian companies to participate in international carbon markets and further stimulate investment in Canadian climate mitigation activities, particularly for carbon removal technologies.
The government statement highlights Canada’s potential to build a globally competitive carbon removal industry due to its industrial expertise, geology, clean power, abundant natural resources, and a strong policy foundation.
Background: Article 6 and ITMOs
Under Article 6 of the Paris Agreement, participating countries can form bilateral or multilateral agreements to buy or sell ITMOs to help meet their Nationally Determined Contributions (NDCs). As of Canada’s latest NDC update in February 2025, the country pledged to reduce their emissions to 45-50% below 2005 levels by 2035, and achieve net-zero by 2050.
Under the proposed policy framework, the Government of Canada intends to align ITMO trading with Article 6 criteria. This means that ITMOs must meet standards of additionality, verification, and permanence, while participating countries must apply a Corresponding Adjustment to prevent double counting and maintain environmental integrity.
Once the policy framework is established, Canada can form bilateral agreements with other countries to facilitate ITMO trading. As it stands currently, the UNEP-CCC reports that there are only 112 bilateral agreements in place across 65 countries, and 27.8 million ITMOs transactions involving 7 countries.
As the policy framework develops, the government has stated that they will engage with provinces and territories, Indigenous organizations, and other partners in exploring a possible approach for operationalizing ITMOs in the Canadian context.
Implications for the Canadian Market
This new framework will allow Canadian companies to engage directly in global carbon markets, generating investment in climate mitigation activities including both carbon dioxide removal (CDR) technologies and nature based solutions (NbS).
Julie Dabrusin, the Minister of the Environment, Climate Change and Nature, highlighted the impact of the framework, stating:
“The trading of ITMOs under the Paris Agreement can unlock greater global climate action by making it easier to transfer emission reductions and removals between countries. This is about turning our natural advantages and homegrown climate innovation into investment, good jobs, and new export opportunities. A clear framework for international carbon credit transfers can help Canadian companies scale, attract capital, and bring more innovative technologies to market, strengthening our position as a leader in the global clean economy.”
Certain observers also view this policy initiative as a step toward aligning Canada’s approach with the EU’s decarbonization strategy, particularly as both parties consider a strategic partnership.
Opportunity for the Carbon Removal Industry
CDR is increasingly recognized as a vital tool for climate mitigation for extracting CO2 from the atmosphere for long-term storage. According to the official announcement, Canada has the opportunity to become a leading producer of high-quality carbon removal technologies.
Canada has both the policy landscape and natural resources to support a CDR industry. Policies such as industrial carbon pricing and emissions regulations create a market for CDR technologies, while incentives-based policies support financing and R&D. On the resource side, Canada has low-carbon electricity to power CDR technologies, geological reservoirs for CO2 storage, abundant biomass for BiCRS and BECCS technologies, marine research centers for ocean-based CDR, and a strong mining sector that can support weathering and carbon mineralization CDR.
Broadening investment channels from domestic markets to international markets could provide Canadian projects with greater access to global capital and demand. Carbon Removal Canada estimates that 11 megatonnes of carbon removal capacity is already represented by announced projects that are awaiting construction, and this new initiative could unlock $8 billion in investment in the Canadian economy by 2030.
Additionally, the Carbon Removal Canada report cited in the announcement estimates that Canada’s domestic CDR sector has the potential to generate hundreds of thousands of jobs and add billions to the country’s GDP by 2050.
ClearBlue will continue to monitor and report on any further developments. Contact us for a conversation about our Voluntary Carbon Markets expertise and the solutions we offer.
